It’s looking like the weekly E/U candle might have been on the money! Last week’s candle was a bullish-reversal style ‘Inverted Hammer’ and the action so far this week has been bullish. This gain is even more significant given the sell off seen across most stock markets. There is still a possible daily chart ‘Bear Flag’ developing here though and so traders need to trade carefully especially given the high impact EUR-sensitive data still to come this week.
E/U weekly: last week’s bullish-reversal ‘Inverted Hammer’ has been followed by bullish activity so far this week:
E/U 4hr: the E/U is trading higher this week but this is mostly due to the weaker USD:Â
E/U 4hr Cloud: the E/U is above the 4hr Cloud but there hasn’t been a bullish T/K cross here:Â
E/U daily: the daily chart shows the potential ‘Bear Flag’ pattern still building up on this pair. However, any continued USD weakness will help to support this pair. Traders need to watch the Flag trend lines here to assess any breakout move. The daily chart is also useful to help with identifying bullish targets for any potential follow through activity. The first obvious target would be 1.30 and after that there is a congested zone up ahead of the 1.35 level.  This congestion comes from the 50% fib of the recent bear move, the daily and weekly 200 EMAs near 1.34, the 61.8% fib and then the 1.35 level:
Summary:
- The E/U is trading higher, primarily due to USD weakness. Continued USD weakness will help to support the E/U.
- The E/U is possibly forming up in  daily chart ‘Bear Flag’ though and trend line breaks with momentum would help to guide traders here. Watch these trend lines with further high impact EUR- sensitive news this week.
- Targets for any bullish continuation include: 1.30, the 50% fib at 1.325, the daily/weekly 200 EMAs near 1.34, the 61.8% fib and then the 1.35 level.
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